So why do VET FEE-HELP programs cost so much?

I have to admit over the past week or so I have had a bit of a dilemma floating around in my head, it start when the changes to VET FEE-HELP were announced in the federal budget and has continued to grow across a number of discussions I have had in various forums and the fact that I am seeing more and more facebook ads for VET FEE-HELP courses.  So my question is really quite a simple one.

Why does the cost of a Diploma vary from $4000 to $20,000?

 

Now let’s be honest here and look at some figures, even at a base price of say $4000 per student, a cohort of 25 students produces a gross income of $100,000, however at $15,000 per student it produces a gross income $375,000.  I guess my question here is

does it really cost, even with making a profit, $375,000 to deliver a Diploma to 25 Students.

One of the arguments I have often heard around why some providers charge much higher fees for these programs than others is that their course is the best and provides the best outcomes and is delivered by ‘insert name here’, however these aren’t university courses we are talking about, these are VET, nationally accredited courses, all of which have exactly the same performance criteria and everyone who is deemed competent, whether they have paid $0 or $20,000+ for their Diploma ends up with a piece of paper that says the same thing.  It doesn’t matter how much you have paid for your Diploma, the system says they are equal.

The real problem I have with this is that there really is something that is not being made clear here and that is students opting for VET FEE-HELP courses are getting themselves into

DEBT

and often the students who are taking up this option are the ones who can really least afford it in the long run but who are seduced by slick marketing, new ipads or laptops and promise of never really having to pay it off, well unless you earn over, a dollar amount that could be changed tomorrow and severely affect your ability to pay your bills.

I also know that one of the arguments for the costs associated with the deliver of higher level qualifications is that there is a lot of administration and marketing and other costs  involved in the VET FEE-HELP system and that may be true, but even if the delivery of a diploma level program to 25 Students, with everything included (admin, marketing, student toys) was $250,000 ( and I have to say I think I am being really generous here) the gross profit margin is still 33%

I am trying really hard not to think that at least some of the providers out there utilising VET FEE-HELP as a part of their business plans are simply grossly overcharging their students and trying to suck as much money out of the Government and in the long-term the students as they can, but when I think about the figures it really does seem that at least some providers might be.

If anyone has some figures about how much it actually costs for the delivery of Diploma level programs under VET FEE-HELP or a justification for why a Diploma of Counselling and other course should cost a student in excess of $18,000 I would really love to hear them.

 

 

 

 

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About pauldrasmussen
Paul is the winner of the 2013 Leadership in VET Quality Award and the 2013 LearnX Learning Manager of the year award. A Thought Leader and Speaker on Organisational Learning, Professional Development, Motivation, Leadership, Management and Professional Ethics, he speaks widely and has published work on the areas of Learning and Development, Learning ROI, Business, Management, Leadership and Ethics. With Qualifications in Ethics and Bioethics, Organisational Learning and Development, Training, and Business Management and Leadership, Paul has worked in and with a wide range of public, private, government and not for profit organisations. He is currently the National Training Manager for Spectrum Training and the principal consultant with Rasmussen Learning. Specialties: • Organisational Learning and Development • Ethics (Business, Professional and Theoretical) • Learning Management and ROI • Professional Speaking • RTO Management • E-Learning • Management • Leadership • Learning Management Systems

5 Responses to So why do VET FEE-HELP programs cost so much?

  1. Amy Boleszny says:

    Thank you for posting this because it is an alarming trend that I have been watching and commenting on for some time. If I can make a modest and sustainable profit on $4500 per Diploma course delivered by what is essentially one on one learning, what obscene profits can be made for charging for to six times that? Also, the provisos for VET Fee Help are that one cannot offer inducements like computers and iPads so any provider who does this is in breach of the rules and should be reported. How much does an iPad cost anyway? Not enough to seduce a thinking person into taking on an extra $8,000 or more debt over and above going market price.

    Given that all my students can pay by instalments, I find that mature age students will still come to the cash at entry point provider. Disturbingly, it is the young who are going for the pie in the sky pay on the never never provider. Many simply are not worldly wise enough to realise that putting $4,500 on the credit card and paying it off over a year works out cheaper than putting a millstone round their necks.

    Here is what I would like to see posted on very VET Fee Help site: the same how long it will take you to pay off the debt that all credit card providers have to put on their account statements i.e. if you pay the nominal amount of X dollars it will take you 30 years to pay off. If you pay off in larger amounts of Y dollars it will take only this much.

    I have seen my family pay off their HECS to the detriment of saving a third of a buying price for a home. The providers who are rorting the VET Fee Help are effectively saddling people with a mortgage for life,

  2. Amy Boleszny says:

    I could have added that there are some Diploma programs that genuinely do cost enough to deliver them at a price over $10,000. A massage therapy course, for example, does cost over $12,000 with a reputable provider because it is very labour intensive and the courses may run upwards of 18 months to two years allowing time for maturing skills and practicums. A Diploma of Business delivered only by online learning does not have the same operating costs and should be viewed with suspicion of price gouging.

  3. Rod Piper says:

    Through good read, I agree with everything you have said.

  4. Sam Rad says:

    A: A reasonable VET Diploma requires work-placement, industry trainers, practical training,Small classroom size and individual support.
    B: Student have the option to select a VET or Higher Education Program.
    C: Companies and individual invest in a business to make profit. A private provider is a business entity and not a charity.
    D: More competition will eventually reduce the prices.

  5. shelleyerichards says:

    Oh to have 25 students in a class and/or to be charging >$5000 per course. Until Jan 2013 when we sold our RTO, our Diploma courses were all under $4000 and we often only had 6 or 8 students per class. Mind you we weren’t making big profits but that wasn’t why we were in business….

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